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Colorado Springs Utilities Board asks staff to re-examine payment structure to city

June 19, 2017 Updated: June 20, 2017 at 8:33 am
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photo - Colorado Springs Utilities Customer Service Center (Image via Google Maps)
Colorado Springs Utilities Customer Service Center (Image via Google Maps) 

Colorado Springs Utilities is considering whether it needs to increase its annual payment to the city.

Monday afternoon, the Utilities Board - composed of city council members - asked Utilities staff to re-examine the formula used to calculate the annual payment, called a surplus, and see if a change is needed.

The concept of altering the existing formula, which has been in place since the city council approved it in 2010, has been on the Utilities Board's radar for about a year, said Vice Chair Andy Pico. However, the issue was deferred for some time to allow the 2017 City Council election to conclude, among other things. Now, however, both Utilities and Colorado Springs need to finish the work so they can cement their 2018 budgets, he said.

Last week Mayor John Suthers asked Utilities Board members to take another look at the annual payment Utilities makes to the city, covering what it would pay if it were not municipally owned. Since 2010 those payments have hovered around $31 million and have not increased alongside Utilities' revenues, he said.

The way the payments are currently calculated is based off the amount of gas and electricity Utilities customers use each year. The formula does not take inflation into account and may have cost the city between $11 and $17 million over the past six years, The Gazette previously reported.

Both Pico and Board Member Bill Murray rejected the notion that the city has been shortchanged, however.

Though Suthers says the surplus payments aren't as high as they should be, Pico noted that Utilities is paying precisely as much as the formula mandates.

In addition, Murray questioned the motives behind the suggested increase.

"Are we getting what we are paying for from our CSU surplus revenue or are we just being used as a pass through to raise taxes without a vote?" he wrote in an email.

While he does support the idea of re-examining the formula, Murray said the payments need to be on par with what other municipally-owned utilities pay their respective cities.

"I want to revisit the entire structure," he said. "But again, it's got to have balance, it's got to have equity and it's got to be in reference to what everybody else pays."

Rather than dramatically increasing the surplus payment to try and catch up to income lost since 2010, Pico said he'd rather move forward from this point on. That is, if Utilities opts for a change at all.

"Changing the formula to one that more accurately takes into account changes over time from this point forward might be appropriate," he said. "It might not."

With Monday's direction from the Utilities Board, Pico said staff will examine the formula and pass their findings along to the board's finance committee - which consists of Chairman Tom Strand, Council Member Don Knight, Pico and Murray - who will then make a recommendation to the entire board.

"Probably won't be ready to come back to the board in July," he said. "I think the timeline is going to be more like August to come back with our recommendation."

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